Clean capitalism gets mixed results in the Andes

Barrick Gold has been funding projects near its controversial Pascua Lama mine, in the name of corporate social responsibility. But local citizens wonder what will happen to them when the gold runs out

Back on the plane to La Serena.

Photograph by: Catherine Solyom
, The Gazette

ALTO DEL CARMEN, CHILE/SAN JUAN, ARGENTINA — Houses for the homeless, wireless Internet for remote villages, new computers for the local school, kite-sailing competitions, a centre for the disabled.

These are a few of the things Barrick Gold has helped finance during the last few years in communities living near its controversial Pascua-Lama mine, under construction in the Andes mountains on the Chile-Argentina border, as part of its commitment to corporate social responsibility (CSR), or as it is called in Spanish, “mineria responsable.”

If these programs sound like they are beyond the normal purview of a Canadian gold mining giant, that’s because they are. Barrick often works with local non-governmental organizations (NGOs) who are better acquainted with health and social problems in their own communities. The NGOs share their expertise; Barrick puts up the money.

It’s hard to be against CSR, now part of the playbook of most Canadian mining companies wherever they have set up shop around the world.

Who could argue that the children of Jáchal, Argentina, for example, should not get to see a dentist, courtesy of Barrick? Or that the people of Vichuquén, Chile, left homeless after the devastating earthquake of 2010, do not need the houses Barrick can afford to build?

And why shouldn’t a company that stands to make more than $1 billion a year off the gold and silver buried high in the Andes give a little back to improve the quality of life in the valleys below?

In part thanks to its commitments to CSR, Barrick Gold in November was ranked No. 1 among Canadian mining companies on a sustainability index by Corporate Knights, a media and investment research company based in Toronto, which bills itself as “the company for clean capitalism.”

Barrick’s top position was due especially to its performance in water productivity (revenue generated per cubic metre of water used) and “pay equity” (ratio of highest-paid executive compensation to average employee pay). It’s a somewhat surprising result given that Barrick’s former CEO Aaron Regent — fired in July — earned $9.2 million last year, while a mine worker at Pascua-Lama typically earns about $20,000.

But CSR has become controversial because, observers said, it does not necessarily make the mining more responsible — it makes it easier to sell.Rod Jimenez, the vice-president of corporate affairs for Barrick South America, said the company has done a lot to build trust in the community, likening the battle for hearts and minds around Pascua-Lama to a marriage.

“You go through phases and have to work at it,” Jimenez said during an interview at his office in Santiago’s posh Providencia neighbourhood in the Chilean capital. “It’s been a challenge.”

In Argentina and Chile, Barrick has spent millions on advertising. In San Juan, Argentina, for instance, giant billboards tower over some of the town’s busiest intersections with slogans like “We take care,” while television ads for Barrick Gold feature satellites and cellphones, lesser-known uses for its product than jewelry and gold bullion. (Industrial uses accounted for 10 per cent of the demand for gold in 2011.)

And in both countries, the company has stepped in where cash-strapped local governments have failed to provide basic necessities.

“We know if we don’t do things right here, we can’t go to other countries,” Jimenez said. “We want to make sure when we leave we don’t leave behind a ghost town ... We want to leave a legacy.”

Just what kind of legacy Barrick leaves remains to be seen, however.

As more money has been pumped into local communities during the last decade, concerns over the Pascua-Lama mine’s potential environmental legacy, in particular its impact on scarce water resources, have faded into the background.

And unlike government funding of health and social services, ostensibly available to all, Barrick can pick and choose what to fund in the name of CSR, thereby creating winners and losers in every community.

Those studying to become mine operators in the Huasco Valley receive funding, for example, students of agronomy or oenology don’t.

Daviken Studnicki-Gizbert, a history professor at McGill University who is also the coordinator of the McGill Research Group Investigating Canadian Mining in Latin America (MICLA), said CSR, which is supposed to be about consultation and respecting local laws and human rights, is really mitigation.

A mining operation is a high impact, high intensity, low duration enterprise, Studnicki-Gizbert said, whether in terms of how it affects social relations, and how everyone gets along, or the environment that supports a community’s way of life.

“The social and physical environment won’t necessarily be destroyed, but it will be hard hit,” Studnicki-Gizbert said. “So with CSR the company recognizes that and proposes ways to mitigate it through these kinds of programs. But CSR simply allows a company to continue its operations.”

The $60-million water fund — also called the compensation fund — to win the support of farmers is a prime example.

So is Barrick’s contribution to building housing in Vallenar and Copiapó, in partnership with an NGO called Un Techo Para Chile (A roof for Chile). It’s largely because of mining, and its thirst for water during the last decades, that the Copiapó basin has run dry. (Producing an ounce of gold on average requires 6,000 litres of water.)

Farmers no longer able to cultivate grapes or mangoes in their villages then flock to the city in search of mining jobs, putting pressure on housing resources and creating shantytowns. But now that the NGO has partnered with Barrick, it might make them less critical of the company, and mining in general.

For Studnicki-Gizbert, this kind of CSR is more like public relations — and it’s dangerous.

“It gives an aura of concern and respectability to the industry on social and environmental issues. But the company never sits down and actually says, “Do you want this mine here? It’s not consultation. It’s a performance.”

Given the demands often put on scarce or vulnerable water resources, perhaps it means proposing smaller scale mining over a longer period of time, Studnicki-Gizbert said, “not a high-intensity bomb that leaves behind a ghost town.”

If companies really wanted to do the right thing they would increase the percentage of royalties paid to national governments and let the government provide the services. Barrick Gold will pay three-per-cent royalties for Pascua-Lama; mining companies in Quebec pay 16 per cent.

“There’s the contradiction. Why is it that companies like Goldcorp and Barrick are cashing in on providing services in a PR way — why not just pay higher royalties?” Studnicki-Gizbert said. “But companies have been fighting that. They’re worried about resource nationalism.”In San Juan, Miguel Martin and Miguel Greco, one a former journalist, the other a pediatrician, work in Barrick Gold’s community relations office, going door to door, taking the pulse of residents’ views on mining in the province, where Barrick’s Veladero gold mine accounts for 34 per cent of the gross domestic product. Lately, the city is split roughly three ways — for, against, and “don’t care.”

Martin jokes that people have come to see Barrick as Santa Claus, giving out presents left and right. “But we are not Santa Claus,” he said more seriously.

Barrick does spend about $2 million a year on CSR projects in San Juan and the surrounding villages closest to the mine, and they run the gamut. A kite sailing competition in Rodeo — renowned for its intense winds at precisely 2 p.m.; financing for a book on San Juan’s cultural heritage; money to subsidize 10 ranchers a year in Jáchal.

It’s a lot of money in these parts. As Martin points out, six years ago, the mayor of Iglesia managed a local bar. Now he is managing millions.

Luis Balmaceda, the school principal in Iglesia for the last 15 years, said thanks to Barrick the children have a new gymnasium adjacent to the school. They’re learning to play hockey, he said. And Barrick also donates enough gas per day to fuel the school bus that brings children from outside the village.

Balmaceda, sipping mate while most of the village around him sleeps the siesta, admits that the town is changing with the influx of money. There are parties every Saturday night. More noise and traffic. Prostitution. Drugs, even. “We weren’t prepared for that,” he said.

But overall the effect is positive, albeit uneven.

He blames the government. “What has happened to all the royalties from the Veladero mine?” he asks. “Why are some people still living without running water?”

He is concerned, however, that mining is all that is left in these parts, and wonders what will happen when the Veladero and Pascua-Lama mines are closed.

On both sides of the mine, it tends to be those not benefiting directly from Barrick through jobs or CSR spending that remain openly critical of the company and its operations.

Freddy Espejo, a native of Iglesia, worked as an environmental supervisor at the Veladero mine for six years, but was fired after he raised concerns about cyanide containment pools being too close to rivers, and damage to glaciers at the site, seven kilometres southeast of Pascua-Lama.

That was in 2004. He has since watched helplessly as his town has become “colonized.”

“What is Barrick doing playing doctor and teacher? They’re handing out 300 pesos here, a tractor there, to keep people happy. But even those benefiting feel colonized. They just don’t say so in public ... I think it will take an accident for people to wake up. And by then it will be too late.”

Patricia Alvarez, born and raised in Alto del Carmen, 45 kilometres from the entrance to the mine on the Chilean side, said CSR, as practised by Barrick, is about buying people’s support and driving a wedge in the community between those benefiting from Barrick’s largesse and those who still oppose the mine, more than a decade after it was initially proposed.

“Since the mine came in, they’ve been hiring anthropologists, psychologists, giving this, giving that — even the school buses have the Barrick logo on them,” Alvarez said. “How can you speak out against the mine when you’re taking their money?”

Alvarez, who ran for town council in October, even accuses Barrick of electioneering in 2008. Nora Rojas Ardiles, who was in charge of CSR for Barrick’s office in Alto del Carmen — donating computers to the local school down the street, for example — ran for mayor that year, setting up her campaign office across the street from Barrick. She won, but could not explain to journalists where she got the money to hand out soccer jerseys and traditional dresses, or pay for people’s bills or medical expenses.

“The only thing missing was Barrick’s logo on city hall,” Alvarez said.

Studnicki-Gizbert, whose research group has compiled a list of 81 conflicts in Latin America around Canadian mines, has seen it all before, with Barrick and other companies, throughout the continent.

“The corporation is everything in these zones,” he said. “They’re the source of money and they control the politics. Even those who are working for the corporation feel invaded.”

He said for corporate social responsibility to mean responsible mining, there needs to be consent from local communities. “They bear the brunt of the social and environmental consequences of mining,” he said, “and if they do consent, they need to be involved in the design of the mine.”

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